The mayor of a small town near Paris has gone on hunger strike and pitched a tent outisde parliament to demand emergency funds from the government.

Sevran mayor Stephane Gatignon, who began his high-profile protest on Friday, claims the financial crisis is pushing his poor town to ruin and he needs some five million euros to pay municipal bills.

"The debt crisis is affecting local governments and so the problem that we have is that we have undertaken public works, so we need a credit advance to pay for these works such as urban renovation, school infrastructures, etc. But today the banks no longer want to lend us any money. So we should be able to get extra finance to be able to have access to this credit," said Gatignon.

Local government funding packages for such cases are set to rise if a measure is passed in parliament on Tuesday.

Nearly three years into a debt market crisis in Europe, France's Socialist government is struggling to slash its public-sector deficit to three percent of gross domestic product next year, from 4.5 percent this year.

While President Francois Hollande promised to do so without subjecting French voters to Greek-style austerity, his 2013 budget seeks to raise 20 billion euros in tax rises and 10 billion more in spending cuts - the biggest budget squeeze in more than half a century.